# Basic Moving Averages idea?

Trend following.

Simple Moving average (Period 50)
-To identify trend direction
-Price above moving average long
-Price below moving average short

Exponential moving average (Period 20)
-Signals for entry
-Angle changes from negative to positive go Long.
-Angle changes positive to negative go Short

I have not tested and have estimated the period inputs. I will test 100 samples on daily candles to see how it works. Just thought Id put it here in case anyone wants to experiment.

By developing a theory and backtesting it yourself you are doing better than most who stumble into Forex.
You might find your theory to be more effective on certain pairs or even certain timeframes.
Do alot of testing and if not anything else you will learn alot from the process.
Good luck and keep us posted.

Very nice. Let us know how you get on

That is about six months data.
Is the historical backtest timeframe sufficient?
On which pair or pairs do you intend to test it?
What win/loss ratio are you looking to achieve using these periods?
Is there a mathematical reason for choosing one time period as simple and one as exponential?

Can you confirm the following (sorry to be pedantic, but I ask myself these questions before setting up a plan scenario)
1 That the SMA(50) is the closing values of the sum of the last 50 days candles divided by 50
2 What is the equation used to derive the EMA(20) - do you have the weightings applied to each of the 20 candles for the specific EMA you intend to use? It is my understanding there may be different equations applied to differently sourced EMA indicators.

Thanks

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Thanks for the questions Mondeoman. Il do my best to answer quickly.

100 is the minimum I would do to get a rough idea. Its not ideal but I have other test that I am doing currently. I just liked the idea in my head haha.

I will just test it on GBP-USD using 1:1 RRR

The reason I chose exponential for the trigger was to have more weight on the most recent price movement. I aim for a more reaction rather than prediction style. I dont have any mathematical reason for this rather just what looks right on the chart.

Unfortunately I can not verify how the indicators are coded into MT5. They are the standard ones supplied with the software though. The EMA I would like to use is where it adds the last candle twice.

Sorry but my knowledge and skills are still quite limited so I cant answer your questions very well. I am using a more caveman approach and just throwing everything at the charts to see what sticks.

My answers in italic text within the above statements.
Keep it up. A good start.

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I found this link to an explanation of all the MAs, and clicked on the Exponential option to reveal the line after the URL below.

Exponential Moving Average (EMA)

Exponentially smoothed moving average is calculated by adding of a certain share of the current closing price to the previous value of the moving average. With exponentially smoothed moving averages, the latest close prices are of more value. P-percent exponential moving average will look like:

EMA = (CLOSE (i) * P) + (EMA (i - 1) * (1 - P))

Where:

CLOSE (i) β current period close price;
EMA (i - 1) β value of the Moving Average of a preceding period;
P β the percentage of using the price value.

I cannot confirm if P is an adjustable (like, for example the number of periods (eg SMA (14) is adjustable. I have only ever seen EMA (xx) where xx is the number of periods or candles. Maybe I need to look a bit deeper into this. And find out what value of P is commonly used.